(Reuters) - Document storage company Iron Mountain Inc (IRM.N) said it will look to convert into a real estate investment trust, almost a year after hedge fund group Elliott Management nudged the company’s management for the conversion.
Shares of the company rose 14 percent in after-market trade.
As part of the conversion process, the company would distribute between $1 billion and $1.5 billion to shareholders from accumulated earnings and profits.
Iron Mountain said it plans to become REIT from January 1, 2014. Converting to a REIT cuts a company’s tax burden, but it also must distribute at least 90 percent of its profits among shareholders.
Investors, including Elliott have long argued for the company to convert to REIT, given its considerable land holdings and the resulting tax savings. It operates warehouses that store and manage large amount of physical data for corporations.
Elliott’s proposal last year and an ensuing proxy battle led to the departure of the then chief Executive Bob Brennan. Current CEO Richard Reese had agreed to evaluate shareholder proposals, including the demand for REIT conversion.
Iron Mountain also increased its quarterly dividend payments. The next dividend of 27 cents per share is payable on July 13, 2012 to stockholders of record on June 22, 2012.
Iron Mountain expects to take a charge of about $325 million to $425 million in one-time costs to support the conversion process.
Shares of the company were trading at $32.41, post-market. They closed at $28.40 on the New York Stock Exchange on Tuesday.
Reporting by Himank Sharma and Chandni Doulatramani in Bangalore; Editing by Joyjeet Das